Against a backdrop of rising exports and lacklustre demand, trading in the Asian coffee market is experiencing something of a lull. Traders in Vietnam are offering heavy discounts in comparison to November-expiring futures on London’s ICE (Intercontinental Exchange) — a $250 to $280 discount for 5% black and broken grade 2 robusta beans. A trader based in the coffee belt stated:
The fall in London prices was due to Vietnam’s reopening after lockdowns, easing global worries, and the rise in monthly coffee exports from Vietnam.
Indonesia, another key Asian coffee producing area, also offered heavy discounts for Sumatran robusta beans to November and December contracts. With the new coffee season yet to begin, the period of relative trading inactivity is expected to continue for several more weeks.
A trader said that the discount is even bigger for the January contracts, of between $300 and $330.
In addition to the quiet period for exchange prices, farmers themselves in Vietnam’s primary production area also sold in a slightly lower price range this week than last.
One kilogram, coffee was sold at 39,300 to 41,000 dong ($1.73 to $1.80) as compared to 39,900 to 41,400 dong the week prior. Prices of November Vietnamese coffee futures dropped accordingly on the London ICE to $2.110 a tonne, a 1.6% drop.
Vietnam’s coffee exports were low since the start of the year, sparking global concerns. Because of that, official data expected a 4.2% drop in exports. However, in September, Vietnam’s exports went up by 20.3% as compared to the same period last year contributing to the increase in supply, and the corresponding drop in price
